Canada Central Bank Officials Split Over Economic Rebound

Bank of Canada officials were split on how sustainable a recent economic rebound could be, according to the central bank's rate decision minutes released this week.

The governing council held its benchmark interest rate steady at 2.25 per cent for a sixth straight time on July 15. The minutes show that officials were growing more confident in the economy during the second quarter following a year of flat growth.

Higher global oil prices and signs of a recovery in the housing market were supporting growth over the previous three months, while surveys of businesses and a recent pickup in exports suggested firms were adapting to tariffs and persistent trade uncertainty from the United States. However, there was a range of views among governing council members about the sustainability of the rebound beyond the near term.

The Bank of Canada expects real gross domestic product rose 2.5 per cent on an annualized basis last quarter, and is forecasting modest growth to continue through the second half of the year and into 2027. Inflation ticked up to 3.2 per cent in May but eased to 2.8 per cent in June as the prospect of peace between the United States and Iran helped cool price pressures.

The central bank's officials have been clear that monetary policy faces a dilemma with the war in Iran pushing some prices higher at the same time U.S. trade pressures hamper the economy. Most economists still expect the Bank of Canada to keep its policy rate on hold for the rest of the year.